Sandwiched by powerful forces?

THE consumer staples sector, notably the food and beverage (F&B) sector, draws investor attention for good reason. Everyone needs food. It is an easy sector to understand.

Yet the economic theory is a bit grimmer, as F&B market structure approximates what economists call perfect competition.

In this structure, there are numerous buyers and sellers of identical products. Barriers to entry are non-existent. Firms have tiny market shares and a limited influence on prices. If a chicken rice stall tries to charge 50 cents more for a basic plate, most people will just visit the stall next door. Profit margins are thus thin and constantly under threat.